Mortgage rates surge, capping fastest rise since 1994

Largest one-week increase in 11 years and largest quarterly gain in 28

National /
Mar.March 30, 2022 04:45 PM

(iStock / illustration by Ilya Hourie for The Real Deal)

Mortgage rates last week jumped to their highest level in more than three years, which could bring the housing market frenzy to a close.

The contract rate on a 30-year fixed-rate mortgage shot up to 4.8 percent in the week ended March 25 from 4.5 percent a week earlier, the Mortgage Bankers Association reported. That was the largest one-week increase since February 2011, and it brought mortgage rates to their highest level since December 2018.

Rates have now climbed by nearly 1.5 percentage points since the start of the year, the most rapid increase since 1994. However, mortgage rates were at all-time lows a few months ago, and remain relatively low by historical standards.

Rates have been steadily rising for the past few weeks. In its March 16 report, the MBA said the 30-year rose to 4.27 percent from 4.09 percent. The next week, it was up to 4.5 percent. Now, it’s 4.8 percent.

That means at the beginning of a month, a borrower putting 20 percent down on a home costing $406,000 — the median price for a house — could expect to pay $1,959 monthly on a mortgage. Today, it would be $2,130.

(The rates are for fixed-rate mortgages with conforming loan balances, meaning $647,200 or less. Rates for jumbo loans are traditionally higher, but at the moment are 40 basis points lower.)

The industry is watching closely how buyers react to the rising rates. Some home shoppers accelerated their plans and increased their bids in an effort to close on a loan before rates went higher still. Higher rates mean higher monthly costs for borrowers, and figure to tamp down home prices eventually, but that hasn’t happened yet.

“Even with the ongoing climb in rates, purchase application volumes were little changed last
week,” said Mike Fratantoni, MBA senior vice president and chief economist. “This is particularly auspicious, as we are now in the beginning of the spring homebuying season, and those shopping for homes are struggling with not only higher and more volatile mortgage rates, but also an ongoing shortage of homes on the market.”

But there are signs of change. Mortgage applications decreased 6.8 percent from one week earlier, probably because of rising mortgage rates and home prices and the paucity of listings.

With rates rising, fewer owners are refinancing. The MBA’s refinance index decreased 15 percent from the previous week and was 60 percent lower than the same week one year ago. Only 40.6 percent of mortgage applications last week were for refinancing, down from 44.8 percent last week.





    Related Articles

    arrow_forward_ios
    Related CEO Jeff Blau and 455 Tenth Avenue (Chris Martin, Google Maps, iStock)
    Related launches lodging for executives’ hybrid work
    Related launches lodging for executives’ hybrid work
    Matt Lauer with 26, 28 & 32 Actors Colony Rd (Getty, Susan Breitenbach)
    Matt Lauer finds buyer for languishing Hamptons estate
    Matt Lauer finds buyer for languishing Hamptons estate
    Barbara Russo, Danielle Englebardt, and Oren and Tal Alexander (Getty, iStock BFA)
    Ranking the top residential brokers on the Upper East Side
    Ranking the top residential brokers on the Upper East Side
    From left: PropTech's Thomas Hennessy and Joseph Beck; Appreciate's Chris Laurence (Appreciate, LinkedIn/Tom Hennessy, LinkedIn/Joseph Beck, iStock)
    Single-family rental platform Appreciate to go public in SPAC deal
    Single-family rental platform Appreciate to go public in SPAC deal
    From left: Douglas Elliman's Scott Durkin, Stephen Kotler and Avi Dan-Goor (Douglas Elliman, iStock)
    Douglas Elliman bets on Vegas in westward expansion
    Douglas Elliman bets on Vegas in westward expansion
    366 State Street and 37 Sidney Place in Brooklyn (Corcoran, Zillow)
    Passive house asking $15M tops Brooklyn contracts
    Passive house asking $15M tops Brooklyn contracts
    100 Eleventh Avenue (iStock, Rhododendrites/CC BY-SA 4.0, via Wikimedia Commons, Illustration by Kevin Cifuentes for The Real Deal)
    Lower-end listings dominate Manhattan’s luxury deals
    Lower-end listings dominate Manhattan’s luxury deals
    Wildfire, Houses
    One in five homes facing wildfire risk, report says
    One in five homes facing wildfire risk, report says
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...